Understanding Digital Transformation: Key Elements and Benefits
School
National Economics University**We aren't endorsed by this school
Course
FIN 330
Subject
Information Systems
Date
Dec 11, 2024
Pages
28
Uploaded by GeneralNeutron18973
Unit 06DIGITAL TRANSFORMATIONEmerging Issues of ManagementUnit 07THE DIGITALTRANSFORMATION
CONTENTS•Digital transformation explaination•Elements of DigitalTransformation•Model of DigitalTransformation•Process of DigitalTransformation
In the digital era…010203New employee expectationsNew societal expectationsNew societal expectationsSource: Harvard Business School (2022) Leadership in the Digital Era survey, n=1,500
THEDIGITALTRANSFORMATIONIMPERATIVE97%60%47%Companies won’t remain competitive unless they embark on a digital transformationOrganizations have been on the digital transformation journey for 1-5 years.Organizations have the right talent to compete in the digital eraSource: Harvard Business School (2022) Leadership in the Digital Era survey, n=1,500
44%61%55%51%What companies need to compete in Digital EraCustomer focusData-informeddecision makingContinuous learningCross-function collaborationSource: Harvard Business School (2022) Leadership in the Digital Era survey, n=1,500
Unit 06DIGITAL TRANSFORMATIONDigitization, DigitalizationDigital TransformationDigitization: is the process of converting analog information into digital form using an analog-to- digital converter, such as in an image scanner or for digital audio recordings.Digitalization is the use of digital technologies to change a business model and provide new revenue and value-producingopportunities,”Gartner’s glossary.s
WHAT ISDigital Transformation?Digital transformation involvesa change in leadership,different thinking,the encouragement of innovation and new business models,incorporating digitisation of assets and an increased use of technology to improve the experience of the organisation’s employees, customers, suppliers, partners and stakeholders.”Agile Elephant
WHAT ISDigital Transformation?“Digital transformation is the integration of digital technology into all areas of a business, fundamentally changing how you operate and deliver value to customers...….it's also a cultural change that requires organizations to continually challenge the status quo, experiment, and get comfortable with failure. ”enterprisersproject.com
Increased revenue0102Increased competitive advantage03Getting more done faster and with lessBENEFITS OF DIGITAL TRANSFORMATIONExcerpt From: Lindsay Herbert. “Digital Transformation.”
Digital ChallengesFears from staff….most often is a fear the business is moving away from ‘the existing employees’ core skills.Resistance from management….a perceived threat to theirautonomy and area of responsibilityLoss of revenue from non- digital customer segments….the potential loss of revenue/value from customers who currently rely on traditional channels to transact, access services, and engage with your organization.Decreases in business-as- usual productivity…the biggest overlooked areas is the loss of time and resource a business will incur, while those assets are diverted to the DTprogramme“Inconsistencies in the quality of customer and staff experiences”some areas of the business are lagging behind once digital transformation has already taken place in some parts of the organizationCOMMON DIGITAL CHALLENGES AND THEIR TYPICAL ROOT CAUSESExcerpt From: Lindsay Herbert. “Digital Transformation.”
What are elements of digital transformation?
NEW ELEMENTS OF DIGITAL TRANSFORMATIONSource: Didier Bonnet, George Westerman (2021)
CUSTOM ER INTELLIGENCEEXPERIENC E DESIGNEMOTIONAL ENGAGEMENTELEMENTS OF DIGITAL TRANSFORMATIONTRANSFORMING CUSTOMER EXPERIENCEIntegrating customer data across silos & understanding customer behaviorTechnology: machine learning can doDesign and deliver compelling customer experiences requires:-Tools and practices to provide an intimate understanding of human behaviors and the ability to surface customer insights-Ability to digitally reengineer customer experiences•Emotionally engaged customers are 52% more valuable than highly satisfied customers.•Use digital technology to solicit and enable customer participation across their value chains
ELEMENTS OF DIGITAL TRANSFORMATIONTRANSFORMINGOPERATIONSCORE PROCESS AUTOMATIONCONNECTED & DYNAMIC OPERATIONSDATA-DRIVEN DECISION MAKINGDigitally reinvent operations:•Establishing a core of digitized processes•Incorporates machine learning, robotics, augmented reality, andother technologies to digitally enable its expansionUse sensors, cloud infrastructure, and machine learning (digital threads) connecting machines, models, and processes provide a single source of truth to manage, optimize, and enhance processesTaking advantage of connected devices, new machine learning algorithms, smarter experimentation, and plentiful data to make strategic and operational decisions.
ELEMENTS OF DIGITAL TRANSFORMATIONTRANSFORMING EMPLOYEE EXPERIENCEPERFORMANCE ENHANCEMENTCompanies are considering how robotics and other digital technologies can increase employee productivity and performance — enabling people to work faster, smarter, and more safely.FUTURE READYINGFLEXFORCINGTransforming the learning and development function Providing employees with the skills they need to keep up with the pace of change.Companies need to build agility into their talent sourcing systems To respond to fast- paced digital opportunities and threats.•Multiskilling employee•Using contingent workers•Outsourcing (old)
ELEMENTS OF DIGITAL TRANSFORMATIONTRANSFORMING BUSINESS MODEL•A business model describes the rationale of how an organization creates, delivers, and captures value
ELEMENTS OF DIGITAL TRANSFORMATIONTRANSFORMING BUSINESS MODEL
MULTISIDED PLATFORM BUSINESSINFORMATION BASED SERVICE EXTENSIONS123ELEMENTS OF DIGITAL TRANSFORMATIONTRANSFORMING BUSINESS MODELDIGITAL ENHANCEMENTS•Digitally enhance their existing business models without requiring major changes to the business.•Turning product sales into service offeringsCompanies are expanding their product based business models with information-based services, combining sensors, communication networks, apps, and analytics to create value for customers and new sources of revenue for themselves.This requires advanced analytic capabilities, end-to-end service design, and tight integration with customers’ devices and business processes.Launching a successful multisided platform ecosystem requires specific economic conditions, heavy investment, and luck to reach profitable scale.
CORE PLATFORM- The technology backbone that power a company’s key processes is a strong foundation for operational and transactional systems.ELEMENTS OF DIGITAL TRANSFORMATIONDIGITAL PLATFORMS- Should be well structured, well managed, and only as complex as it really needs to be.EXTERNALLY FACING PLATFORMPlatform that powers the websites, apps, and other processes that connect to customers and ecosystem partners.DATA PLATFORMPlatform that provides the ability to perform intense analytics, build and test algorithms, without disrupting the company’s operational systems.
FOUR CATEGORIES OF DT ENABLERSThe combination of AI technologies that enable autonomous work and self- organizing systems. This reduces error rates, increases speed, and makes it possible to reduce operating costs.Using broadband telecommunications for the mobile or wired networking of the entire value-added chain allows for the synchronization of supply chains, which leads to a reduction in production times and shorter innovation cyclesThe collection, processing, and analysisofdigitizeddata to facilitate and improve predictions and decisions.DIGITAL CUSOMER ACCESS3NETWORKING4DIGITAL DATA1AUTOMATION2The mobile internet provides direct access to the client, who in turn is provided with higher levels of transparency and new services.(Source: Boue´e and Schaible 2015: 19)
0123%Customer Experience0217%Technology Infrastructure0316%Process Efficiency0414%DataManagement0510%Corporate Culture065%Employee ExperienceSource: Leadership in the Digital Era survey, n=1,500, HBSTOP AREAS OF FOCUS IN DIGITAL TRANSFORMATION (2022)
THE DIGITAL TRANSFORMATION PYRAMID
Roadmap forthe Digital Transformation of Business Models
RoadmapfortheDigitalTransformation of BusinessModels1. Digital Reality2. Digital Ambition3. Digital Potential4. Digital Fit5. Digital ImplementationObjectivesActivitiesResultsKnowledge acquisition about Digital Reality-Analysis of value chain and action-Collection of customer requirements-Sketch the existing BM-Value chains with actors-Customer requirements-Uniform description ofexisting business modelDevelopment of a Digital Ambition for the business model•Set objectives regarding the DT•Prioritize business model dimensions-Objective per category for the DT-Relevant BM dimensionsIdentification of the Digital Potential for the business model•Collection of best practices for DT•Collection of enablers for DT•Design of options for future BM- Best practices for DTEvaluate combinations(own industry/ otherof the digital businessindustries)model which serve as- Enablers for the DTthe basis for the- Option space for DTfinalizationEvaluation of the digital business model suitability-Determine the combination of options.-Evaluate the combinations in terms ofBM fit, fulfillment of the customer’s requirements and achievement objectivesImplementation of the digital business model-Finalize & implement the digital BM-Design of the digital customer experience-Design the digital value creation network & partner integration-Finalized and implemented DT model-Digital customer experience-Digital value creation network with partners
In the digital eraIn the digital era, companies face a more dynamic competitive environment:•key competitors are no longer the usual suspects,•customer and stakeholder expectations continue to evolve.•The speed and complexity of technological change require digital transformations to be more iterative than other forms of corporate change.
THE LEADERSHIP TRAITS MOST CRITICAL TO SUCCESS IN DIGITAL TRANSFORMATION.48%Curiosity71%Adaptability47%Creativity43%Comfort with ambiguitySource: Harvard Business School (2022) Leadership in the Digital Era survey, n=1,500